Craft Development SCI v Actis LLP (a firm) & Ors

On an application for security for costs, the court must consider whether an order is just in all the circumstances, with particular attention to whether it would stifle the claim. The claimant bears the burden of showing that it cannot provide security or obtain assistance from shareholders, associates or other sources. Disclosure must be full and candid; unexplained gaps may justify adverse inferences.

The merits are normally disregarded unless one side is shown, without detailed investigation, to be highly likely to succeed. If security is ordered, the amount must reflect what the claimant can realistically raise. The court should adopt a broad-brush approach and balance the prejudice to both parties. Security must not be set at a level which makes continuation of the claim impossible.

Craft, a Cameroonian company represented by a provisional administrator, brought claims against Actis entities concerning a failed joint venture for the development of a shopping mall in Douala. The claims included breach of contract, procuring breach of contract, unlawful means conspiracy and fraud.

Actis applied under CPR 25.26 for security for costs. It was common ground that Craft was impecunious and that the condition in CPR 25.27(b)(ii) was satisfied. The central issues were whether security would stifle the litigation, whether delay, merits or alternative remedies affected the discretion, and what amount and payment arrangements were appropriate.

1. Order justified. Craft had not fully discharged the burden of proving that it could not obtain security. Although its minority shareholder had disclosed substantial financial difficulties and most identified assets were encumbered or unavailable, there were unexplained gaps concerning the funding of Craft’s continuing legal costs and the availability of assistance from associates, including a previous lender. The court was therefore satisfied that it was just to order security.
2. Stifling. An order at the £1.6 million sought by Actis would stifle the claim. The court accepted that Craft and its shareholder could not raise that sum at short notice. The risk of stifling was therefore material to the amount, even though it did not prevent an order altogether.
3. Other factors. Actis had not made an unreasonably late application because Craft had been on notice since 2022 and the intervening period was substantially occupied by the preliminary issue proceedings. The merits were disregarded because Actis had not shown that its defence or Craft’s claim was highly likely to succeed without detailed investigation. Security proceedings were not to become a mini-trial or a substitute for summary judgment. The proposed alternative remedies under Cameroonian law were also disregarded because the evidence was insufficient.
4. Quantum and arrangements. Applying CPR 25.2(3), the court adopted a broad-brush assessment and balanced the parties’ respective prejudice. Security was fixed at £300,000 towards future costs up to completion of the ordered lay and expert evidence. That was the most that could be ordered without making compliance impossible. Payment was directed in equal staged instalments broadly aligned with the expert-evidence timetable. Costs of the application were ordered to be in the case. Permission to appeal and a stay were refused.

This was a first-instance application in the High Court. The underlying proceedings remained pending and were not finally determined.